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Thursday, February 23, 2012

Wow For Looks - Wow For Price!

From Today's Seattle Daily Journal of Commerce. "Everybody loves a bargain. We think we've found one in downtown Salem, Ore."

The Meridian is a bank-owned, mixed-use complex that cost more than $40
million to build and is now being offered for sale for $8.8 million. It is
mostly completed but another $4 million will be needed to finish it, says
broker Rob Marton of HFO Investment Real Estate in Portland. HFO has the
listing with Grubb & Ellis' Portland office.

“It's a phenomenal looking building. You drive by it and you literally go,
‘Wow! What's that doing here?'” said Marton. He said The Meridian would stand
out even in Portland's Pearl District.

Dan Berrey of Commercial Concepts Inc. developed the six-story
complex, which has housing and commercial above underground parking. The
award-winning project was designed by Arbuckle Costic Architects and built by
John Hyland Construction. It was substantially finished in 2009.

The Meridian has about 15,300 square feet of commercial space and 89 housing
units. Roughly two-thirds of the commercial space sold for $180 a foot, and
four of the 89 condos sold for between $214 and $383 a foot, Marton said.
Thirty-seven other condo units are finished and rented for about $1.25 per
square foot.

Grubb and HFO started marketing The Meridian earlier this month. The
call-for-offers date has not been set, but Marton said the team is aiming for
March 9.

Berrey said the project was hurt when Fannie Mae and Freddie Mac stopped
lending money to residential condo buyers. Work stopped when the Federal
Deposit Insurance Corp. shut down the construction lender, First Regional Bank
of Los Angeles. “It was a double-edged sword,” Berrey said.

The original lender was taken over by First Citizens Bank of North Carolina.
The Oregonian reported in 2010 that First Citizens sued to recover $35 million
outstanding on the loan. Berrey declined to talk about how much was owed or
name his equity partners.

The loans and other real estate that First Citizens acquired were covered by
a loss-share agreement with the FDIC. That provided protection against losses
to First Citizens Bank and, according to Berrey, made the bank less willing to
strike a deal with him.

“We had tried several times to negotiate with [First Citizens],” Berrey
said, though he offered the bank $20 million more than a year ago. The bank
held on, and the value of The Meridian kept dropping. “It's a great example of
taxpayer waste, in my opinion.”

(c) HFO Investment Real Estate, LLC

HFO Investment Real Estate LLC

2424 SE 11th Avenue

Portland, OR 97214 (503) 241-5541

Cody Hagerman, Principal Broker, licensed in Oregon & Washington

Portland-based HFO was founded in 1999 and specializes in the apartment sector of the commercial real estate market. The company is known for more than its ability to attract the largest possible pool of buyers. By offering additional client benefits including complimentary industry-specific events, market news, and original video programming via HFO-TV and Multifamily Marketwatch podcasts. HFO is a thought-leader within its category. From its inception, HFO has operated in sharp contrast to most of its industry competitors, using intra-office collaboration to provide service to more customers through sales velocity and loyal client relationships.